Market Basket revolt a rare display of the power of employee loyalty

Saturday

Aug 9, 2014 at 6:00 AMAug 9, 2014 at 8:53 AM

By Tom Moroney BLOOMBERG NEWS

The saintly visage of Arthur T. Demoulas hangs over the New England summer like a rock star.

His balding head and five o'clock shadow are plastered on posters and placards, his name scrawled across the back windows of pickups. In song and verse, the demand is the same: Bring back our beloved Artie T.!

In a decades-old family feud, Demoulas, 58, was fired as chief executive officer of the closely held Market Basket supermarket chain by a board controlled by his cousin, Arthur S. Demoulas. The 25,000 nonunion workers rose up in revolt, holding rallies, halting deliveries and leaving shelves unstocked at the 71 stores after his abrupt departure in June. From warehouse workers to store managers, they've cost the company tens of millions of dollars. As improbable as it seems, they are risking it all for one man.

"We are a family, and they messed with our dad," said Charlene Kalivas, 57, who has worked for Market Basket for 18 years and manages the sandwich shop in one of two Tewksbury locations.

How did a single CEO in an age of stratospheric executive pay, outsourcing and downsizing generate such uncompromising loyalty?

Employees say the pay is good, the benefits generous. One store manager told Bloomberg News she makes $140,000 a year. Her cashiers start at $12 an hour, $4 above the Massachusetts minimum wage, and Christmas bonuses go even to part-timers.

Yet, the money runs a distant second in importance to the intensely personal bond they say Demoulas has fostered with employees during his 11-year reign.

Rosa Pereira, a 28-year veteran and deli manager in North Andover, was out for two weeks — with pay — after her mother died three years ago. Her first day back, the phone rang. It was Demoulas wanting to know how she was.

At the opening of a new store where she was assigned a year before, Demoulas headed straight for her with his hand out.

"Congratulations on our new store," Pereira, 46, remembered him saying with a handshake. "He didn't say 'my store,' he said 'our store.'"

Sean Morse, 44, assistant manager at the Londonderry, New Hampshire, store, said his father died three years ago. Demoulas called him at home to offer his condolences. A short while later, after a store opening, he yelled for Morse from across the parking lot to come meet his wife.

"He introduced us, told her what happened to my father and he remembered the diagnosis," Morse said. "You can call me back in a month, and we'll still be picketing if we have to."

Corporate America often ignores the power of employee loyalty, according to Emily Collins, an analyst at Forrester Research Inc. in Cambridge.

Collins speaks from personal experience. In a show of solidarity, she said she hasn't shopped at her local Market Basket since the workers took action.

"I'm rooting for Artie T.," she said.

Founded by Greek immigrants in 1917 as a single food store in Lowell, the company has weathered decades of family squabbling for control of the chain.

The deeply divided, seven-member board is led by Arthur S. Demoulas, whose side of the family owns 50.5 percent of the business. Arthur T.'s side owns 49.5 percent.

Trouble erupted this time around on June 23 when the Arthur S. faction voted to fire Arthur T. and replace him with two co- CEOs, James Gooch and Felicia Thornton.

Warehouse workers and drivers walked off the job, employees organized the first of four rallies attended by thousands, each larger than the last, store shelves emptied and customers announced boycotts, taping receipts from rival grocers to the windows of their hometown Market Baskets. Late last month, eight employees say they were fired for spearheading the protests.

Now the stores are open but quiet as workers continue protest vigils outside. In a statement issued Thursday, the company's new CEOs announced the first reduction in hours since the job action, instructing store managers to adjust "to meet current demand," while emphasizing that no one was being laid off.

Larry Collins, 56, who works 32 hours a week in the kitchen of the Reading store, said he was told tomorrow would be his last shift until further notice. Part-time workers like him were losing all their hours while full-timers at his store were being reduced to 35 hours, he said.

Whether it was called a layoff or not, Collins said he was filing for unemployment benefits.

Market Basket's loss of business is estimated to be on the order of tens of millions of dollars. The company has $4.3 billion in annual sales, according to Supermarket News.

It was ranked earlier this year by readers of Consumer Reports as the sixth-best grocery chain in the U.S. in terms of prices and cleanliness.

The Market Basket board has said it's considering selling the company to an unspecified number of potential buyers.

One is Arthur T. himself, according to a statement issued by the board. Another was identified by the Boston Globe as Brussels-based Delhaize Group, the parent of Hannaford Bros., a rival grocer.

Last week, the CEOs issued an ultimatum to workers to resume normal operations or be replaced. Protesters responded with a fourth rally in sweltering summer heat in the parking lot of one of the two Tewksbury stores. About 12,000 workers and customers listened to speeches and chanted "Bring Back Artie T.!"

They ranged in age from 14 to 94-year-old Sal Pilla, a "sacker" or grocery bagger, at the Bellingham location. The D-Day veteran was hired when he was 77.

The broad cross-section risking their necks for the boss — for their mascot they chose a giraffe — is unprecedented in modern American labor history, said MIT Sloan School Professor Thomas Kochan.

Even those with far less seniority than the decades others have amassed said Artie T. has taken good care of them.

Sage Goslin, 18, a part-time cashier in Rochester, New Hampshire, said she fears the $200 Christmas bonus she received last year will be cut under the new management.

Goslin used the money to stock up on essentials like diapers for her infant daughter.

"That bonus doesn't help just me, it helps everyone," she said, citing an older co-worker who bought a pair of much-needed work boots.

Penny Stocki, 53, has been a part-time cashier in Tewksbury for eight years. She said Demoulas's generosity of spirit is contagious. She and co-workers often find themselves making up the difference for a customer who doesn't have enough money to pay the full tab.

Stocki remembers when her son was serving in the military in Afghanistan and Demoulas visited the store.

"He came over to ask about him, and I'm part-time," she recalled. The gesture did more than make her feel good.